Chipmakers Skyworks Solutions and Qorvo Face Downgrade from Citi Analysts
Skyworks Solutions and Qorvo Experience Stock Slump Following Rating Cut
Shares in smartphone chipmakers Skyworks Solutions and Qorvo slipped in early U.S. trading after receiving a downgrade from analysts at Citi. The analysts lowered their rating for the semiconductor groups, citing increased risk to their Chinese operations following the release of Huawei’s Mate 60 smartphone. This downgrade comes as a blow to both companies, as they are also major suppliers for Apple. The analysts changed their outlook from “Neutral” to “Sell” and adjusted their earnings per share estimates for calendar year 2024 while reducing their price targets.
Chinese Operations at Risk for Skyworks Solutions and Qorvo
Citi analysts expressed concerns that the Huawei Mate 60 smartphone will likely utilize domestic radio-frequency and connectivity components, posing a threat to both Skyworks Solutions and Qorvo’s businesses in China. This is especially worrying considering the already weakened Chinese handset market, which has negatively impacted the sales of both companies for over a year.
Analysis and Implications for Skyworks Solutions and Qorvo
The downgrade from Citi reflects the challenges faced by Skyworks Solutions and Qorvo in the Chinese market. With Huawei’s focus on using domestic components, the two companies may struggle to maintain their market share. This downgrade also raises questions about their future growth prospects as major suppliers for Apple. The impact of this rating cut on the chipmakers’ stock prices further highlights the significance of Citi’s assessment.
Looking Ahead for Skyworks Solutions and Qorvo
As Skyworks Solutions and Qorvo navigate the challenges in China, they will need to assess their strategies and explore alternative markets to offset potential losses. Adapting to the evolving landscape of the smartphone industry will be crucial for their long-term success. Investors will closely monitor how the chipmakers respond to the rating downgrade and whether they can regain momentum in the face of increasing competition.
